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Federal Government Seeks to Overhaul the Environmental Assessment Process

May 10, 2012 | Authors: David I. Crocker; Lana J. Finney

Law Firm: Davis LLP - Toronto Office

Recently the Federal Government introduced amendments to several environmental statutes through Bill C-38, titled the Jobs, Growth and Long-Term Prosperity Act, which received first reading on April 26, 2012.

Bill C-38 is a bill to implement the 2012 Federal Budget. The Federal Budget promised to streamline the environmental review process for major economic projects. In the 2012 Budget Speech delivered in late March of this year, Minister of Finance Jim Flaherty stated:

We will implement responsible resource development and smart regulation for major economic projects, respecting provincial jurisdiction and maintaining the highest standards of environmental protection. We will streamline the review process for such projects, according to the following principle: one project, one review, completed in a clearly defined time period. We will ensure that Canada has the infrastructure we need to move our exports to new markets.

Part 3 of Bill C-38 contains “measures related to responsible resource development.” To deliver on its promise of streamlining the review process, Bill C-38 proposes to:

enact the Canadian Environmental Assessment Act, 2012 (the “CEAA”) which will establish a new federal environmental assessment regime;

amend the National Energy Board Act (the “NEB Act”) to allow the Governor-in-Council to make decisions about the issuance of certificates for “major pipelines” and amend the Canada Oil and Gas Operations Act to authorize the National Energy Board (“NEB”) to exercise federal jurisdiction over navigable waters in respect of pipelines and power lines; and

amend the Fisheries Act, the Canadian Environmental Protection Act, the Species at Risk Act and the Nuclear Safety and Control Act.

This bulletin will focus on the provisions of the CEAA and the amendments of the NEB Act that relate to environmental assessment.

The CEAA

Purpose

The stated purposes of the CEAA are to:

protect the components of the environment from significant adverse environmental effects;

ensure projects are reviewed in a careful and precautionary manner;

promote cooperation between the federal and provincial governments;

promote communication and cooperation with aboriginal peoples with respect to environmental assessments;

ensure that environmental assessments are completed in a timely manner;

ensure projects that are carried out on federal lands, or outside Canada and carried out or financially supported by a federal authority, are considered in a careful and precautionary manner;

encourage federal authorities to take actions that promote sustainable development; and

encourage the study of the cumulative effects of physical activities in a region.

Designated Projects

Under the CEAA, “designated projects” will be subject to environmental assessment. The CEAA contemplates regulations that will enumerate what constitutes a “designated project.” At the time of the writing of this bulletin, those regulations have not been publicly released.

This is a marked contrast from the currently in force Canadian Environmental Assessment Act, S.C., 1992 (the “CEAA 1992”), which sets out a list of factors for projects that require environmental assessment.

The 2012 Budget Speech delivered by Minister Flaherty, as well as other statements made by the federal government, suggest that designated projects will be defined to focus on “major projects,” although there has been little direction provided to date as to what would constitute a major project.

Responsible Authorities

The CEAA designates the Canada Nuclear Safety Commission, the National Energy Board (the "NEB") and the Canadian Environmental Assessment Agency as “responsible authorities” for designated projects that are subject to environmental assessment. In addition, the CEAA holds that a federal authority that performs regulatory functions may hold public hearings in the case of designated projects that include activities that are linked to that federal authority.

This is different from the CEAA 1992 which defines the responsible authority as the authority that is the proponent of the project; makes or authorizes payments or gives any form of financial assistance to a project; has administration of federal lands and sells, leases or otherwise disposes of land for the purpose of enabling the project; or issues a permit or licence or grants an approval for a project. Under this CEAA 1992 framework, up to 40 departments and agencies were able to perform environmental assessments.

Time Limits for Review

One of the central elements of the CEAA is that it sets express time limits in which environmental assessments must be concluded. The CEAA imposes the following time-limits:

General Environmental Assessment: within 365 days after the date on which the notice of commencement of the environmental assessment is posted.

Panel Review: within 24 months of the establishment of the review panel, the review panel must submit their report to the Minister and the Minister must issue a decision statement.

The Minister has authority to vary these time-limits.

National Energy Board review: NEB environmental assessments must be completed within 18 months. The amended NEB Act states that the NEB must submit a report to the Minister no later than 15 months after the day on which the applicant has provided a complete application. This 15-month time period may, by order, be extended by a maximum of three months.

Transition

The CEAA includes several transitional provisions to deal with projects that will already be undergoing environmental assessment at the time the CEAA comes into force.

Screening: any screening of a project commenced under the CEAA 1992, subject to some exceptions, will be continued as if the former Act had not been repealed;

Comprehensive Studies: Any comprehensive study of a project which was commenced under the CEAA 1992, is continued as if the former Act had not been repealed. However, for projects commenced before July 12, 2010 and where the responsible authority is not the Canadian Nuclear Safety Commission, a time limit has been introduced: comprehensive study reports must be provided by the responsible authority to the Minister and the Canadian Environmental Assessment Agency within six months after the day on which the CEAA comes into force.

Review Panel: Any assessment by a review panel that was commenced under the CEAA 1992 will be continued under the CEAA once it comes into force. In such a case, the Minister is required to establish a time limit within which the decision statement must be issued.

There is a great degree of uncertainty involved with the transitional review panel provisions. Many review panel assessments commenced under the CEAA 1992 have complex timelines for when hearings and decisions will occur. The transitional provisions of the CEAA Act do not give guidance on how the Ministerial requirement to establish a time limit will interact with previously agreed-to timelines.

Delegation and Substitution

As noted in the 2012 Budget Speech, the CEAA seeks to establish an environmental assessment process that is guided by the principle of “one project, one review”.

Under the CEAA, if the Minister is of the opinion that a provincial government’s (or any agency or body of a provincial government) environmental assessment process would be an appropriate substitute, the Minister must, on request of the Province, approve the substitution of the provincial environmental assessment process.

The Minister may not, however, substitute a process if the Canadian Nuclear Safety Commission or National Energy Board is the responsible authority or if the project has already been referred to a review panel.

Public Participation

Public participation in the environmental assessment process under the CEAA will be limited to interested parties who are “directly affected by the carrying out of the designated project.” The determination of whether a person or group is directly affected will be made either by the responsible authority or the review panel, as applicable.

Decision Statement

Under the CEAA, at the end of an environmental assessment process, the decision maker (e.g. the responsible authority, the review panel, etc.) must issue a decision statement to the proponent of the project, which will inform the proponent of the decisions made and include any conditions that the proponent must comply with to carry out the project.

Enforcement

In terms of enforcement, the CEAA holds that any person who contravenes an order or does not comply with the conditions of a decision statement is guilty of an offence and is subject to a fine not exceeding $200,000 for a first offence and a fine not exceeding $400,000 for a subsequent offence.

Any person who is held to have obstructed or hindered a designated person from exercising their duties under the CEAA is guilty of an offence and is subject to a fine not exceeding $100,000 for a first offence and is subject to a fine not exceeding $300,000 for a subsequent offence.

This is another important distinction between the CEAA and the CEAA 1992. The CEAA 1992 did not have express enforcement provisions and relied on the issuance of subsequent permits to ensure compliance.

Analysis

The CEAA constitutes a comprehensive overhaul of the federal environmental process and represents one of the most fundamental shifts in Canada’s regulatory and environmental policy in its history.

The federal government has sought to legislate certainty and predictability in terms of the timing of the federal environmental assessment process, as well to promote more cooperation with provincial authorities. In many ways, it has achieved this goal with the CEAA. The CEAA should be seen as a triumph for proponents of major projects that will give them a clearer sense of the timelines for environmental assessment, will reduce regulatory overlap and limit the parties who would be subject to an environmental assessment. However, project proponents should also be mindful of the fact that the new enforcement provisions signal the federal government’s intent to have project proponents ensure that they comply with the provisions of the CEAA or face severe monetary penalties.

The CEAA as currently drafted has not addressed a key issue regarding how the transition of environmental assessments referred to review panel under CEAA will take place. As a result, there is some uncertainty over how the CEAA will be implemented.

Critics of Bill C-38 have expressed concerns about the substantive changes the CEAA proposes, as well as the manner in which the changes have been introduced. They note that critical decisions on major projects will be made by the executive level of government and not independent regulatory bodies. As well, critics have objected to the fact that the CEAA requires the Canadian Environmental Assessment Agency to complete complex environmental assessments in shorter time-lines, with less resources. The fact that the new CEAA was introduced through a budget-implementation bill, and not through a separate stand-alone bill, thereby limiting Parliament’s ability to debate the provisions of the bill, is another issue that has been subject to some criticism. In turn, the manner in which the CEAA was introduced may result in less certainty about parliamentary intent should any of the provisions of the CEAA come under judicial scrutiny.

It must also be noted that the CEAA is not yet law, and further changes and clarifications could emerge through the parliamentary process.

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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